If you are filing for bankruptcy, not all your debts will be treated the same. The way the court handles debt depends on whether it is a secured, unsecured, or a priority claim. Here is a brief guide to each type of creditor claim to help you prepare for the first consultation with an attorney.
This is where a creditor places a lien on your property. Common examples of this type of claim include mortgages, property taxes, and car loans. While bankruptcy can remove your liability for these debts, it can’t get rid of the lien. If you don’t pay the debts, the creditors can take the asset away from you.
With an unsecured claim, the creditor doesn’t have a lien against your property. Credit card bills, personal loans, and medical bills are common debts that fall into this category. You can also eliminate them in bankruptcy. One example of unsecured debt is a student loan. However, unless you can prove that paying these loans would cause extreme hardship, you cannot have them discharged in a Chapter 13 or Chapter 7 bankruptcy.
This refers to unsecured debts that can’t be discharged through bankruptcy, such as alimony, child support, and tax obligations. You must pay these before other creditors. While you can’t wipe out these debts, you can arrange a repayment plan through Chapter 13 bankruptcy.
Filing for bankruptcy can involve many complexities. The experienced attorneys at The Gil Law Firm in Dothan, AL, will help you through the process. This law firm opened its doors in 2000. Their attorneys will simplify your case and get you on the road to financial recovery. Besides bankruptcy law, they also specialize in Social Security and personal injury. To request a consultation, call (334) 673-0100. Visit their website for more information about their practice areas.